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April 13, 2026 at 11:54 AM IST
India’s retail inflation, measured by the Consumer Price Index, rose to 3.40% year-on-year in March, marking a 12-month high, according to data released by the Ministry of Statistics and Programme Implementation.
The increase follows a steady firming in prices since the beginning of the year under the revised CPI series with base year 2024. Food inflation at 3.71% in March was the primary driver of the headline print. The rise reflects higher prices across select food categories, continuing the trend seen in February.
March also represents the first inflation print following the escalation of tensions in West Asia. The geopolitical situation has introduced new variables into the inflation outlook, particularly through its impact on commodity markets. Disruptions to energy supply chains and shipping routes have the potential to influence fuel prices and input costs, which could transmit into broader inflation over time.
The Reserve Bank of India has acknowledged these evolving risks. Governor Sanjay Malhotra, in the latest monetary policy statement, noted that while inflation remains within the tolerance band, upside risks have increased. He highlighted the possibility of second-round effects, where initial increases in commodity prices could feed into broader price levels through higher costs for transport, production and services.
The Monetary Policy Committee has set its inflation projection for 2026-27 at 4.6%, with a quarterly trajectory of 4.0% in the first quarter, 4.4% in the second, 5.2% in the third and 4.7% in the fourth.
According to India Ratings, inflation is expected to rise further to around 3.8% in April 2026, with first-quarter inflation likely to exceed the RBI’s projection of 4.0%. The rating agency attributes this to higher energy prices being passed on to consumers, along with rising input and transportation costs, and firm bullion prices. It also flagged risks from a potential re-escalation of the West Asia conflict, which could push crude prices higher, and the possibility of El Nino conditions affecting the monsoon and food prices, particularly in the July-September
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